- The maximum Part D deductible will increase slightly in 2019.
- The ‘donut hole’ will be eliminated for brand-name drugs in 2019.
Q: How will my Medicare prescription drug costs change in 2019, compared with 2018?
A: The Part D prescription drug deductible is a maximum of $405 in 2018, and that will increase slightly to $415 in 2019. Some plans have deductibles well under these amounts, but no plans can have deductibles that exceed $415 in 2019. After you pay your deductible, you pay copays (a fixed amount) or coinsurance (a percentage of the cost) for your medications until the total you and the plan have spent hits the lower threshold of the donut hole.
Due to changes adopted in the federal Affordable Care Act, Medicare’s Part D prescription drug coverage gap (i.e., the “donut hole”) is gradually closing. And due to the Bipartisan Budget Act of 2018, it’s closing a year ahead of schedule for brand-name drugs. There will no longer be a donut hole for brand-name drugs in 2019, although the donut hole for generic drugs won’t be eliminated until 2020.
In 2018, the coverage gap starts when an individual and the drug plan they’re enrolled in have spent a total of $3,750 on medications. For 2019, the coverage gap will start when total spending has reached $3,820, although there will only be a “gap” for generic drugs in 2019, thanks to the Bipartisan Budget Act of 2018.
Prior to 2010, Medicare Part D beneficiaries were on the hook for the full cost of their prescriptions while in the donut hole. But thanks to the Affordable Care Act, the percentage of drug costs that the patient pays while in the donut hole has been steadily declining over the last several years. In 2018, seniors only pay 35 percent of the cost of their brand-name drugs and 44 percent for generics while in the donut hole.
In 2019, the percentage of the cost of prescriptions that enrollees pay while in the donut hole will decrease again (although the upper and lower thresholds for the donut hole will increase, as they do each year). You’ll pay 37 percent of the cost of generic drugs, and due to the Bipartisan Budget Act of 2018, enrollees will only pay 25 percent of the cost of brand-name drugs while in the donut hole in 2019 (instead of the originally scheduled 30 percent), which is the same amount that people pay for brand-name drugs on standard-design Part D plans before the donut hole is reached. In other words, there will no longer be a donut hole for brand-name drugs in 2019.
Once you and your drug plan have spent $5,000 in out-of-pocket drug costs for 2018, you leave the donut hole and become eligible for catastrophic coverage. At that point, you pay a small co-insurance payment for covered drugs for the remainder of the year. In 2019, the upper cap on the donut hole will increase again, to $5,100. The minimum copays for prescriptions in the catastrophic coverage level are set by CMS each year; in 2019, they will be $3.40 for generics and $8.50 for brand names.
It’s important to remember that many seniors do not reach the donut hole in a given year, because their drug costs aren’t high enough. For those individuals, the deductible and the copay or coinsurance below the donut hole will be the most important factor in determining how much they spend on medications.
Since it’s common for Part D plans to have 25 percent coinsurance on medications before the donut hole (and after the deductible), some seniors may find that their costs go up from one year to the next, simply due to the rising prices for prescription drugs. If you’re paying 25 percent of the cost and the cost goes up, your portion goes up as well. According to a Wall Street Journal analysis, the median out-of-pocket cost for a medication purchased via Medicare Part D was $117 in 2015, up from $79 in 2011.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.